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Dell Technologies
Inc.
DVMT 0.25%
is exploring the possibility of launching a traditional IPO instead of making itself known through a proposed acquisition that has encountered resistance from several investors.
The PC and storage giant plans to interview several banks for underwriting roles in an IPO this week, according to familiar people. As a result, he postponed for about a week a roadshow to sell the buyout agreement that was due to start this week, the people said.
Dell would be one of the largest US companies to launch an IPO. However, it is far from certain that it will eventually do so, and questioning banks could be seen as a tactic to put pressure on investors to support the current deal.
Anyway, the move is a sign that tensions are rising between Dell and investors who say the takeover operation underestimates its class V stock. Known as DVMT, this stock has been created to track Dell's controlling stake in
VMware
Inc.
VMW -0.59%
a fast growing provider of cloud infrastructure services.
The acquisition of DVMT would allow Dell to become public by trading its stock for tracking stock. TDM holders would also receive cash for a total consideration of approximately $ 109 per share. But a number of major tracking shareholders have privately criticized the terms, with the main complaint being that Dell overestimates the value of its shares and underestimates the value of the DVMT security. Dell said the deal was "extraordinarily fair" and gave Track-Stock shareholders a path to invest in a larger company.
Shareholders who are considering rejecting the current transaction as part of a vote required to pass it include Elliott Management Corp., Carl Icahn, certain
Black rock
Inc.
Dodge & Cox, Farallon Capital Management LLC and Canyon Capital Advisors LLC, according to familiar people. According to FactSet, these holders represent approximately 20% of the shares.
Sign of the danger that the operation is not likely to suffer, the shares of DVMT are currently trading at just over 96 dollars.
A direct IPO, in which Dell sells shares directly to the public and could buy back stockholders at a lower price, is considered a safeguard. Even if the DVMT agreement collapses, there is no guarantee that Dell will hold a traditional IPO, which, according to some analysts, would result in a downgrade of the company's valuation.
Last week, Dell said its current offer of DVMT is final, which means it will not increase the price. Asked about the possibility of another way of making his IPO on a day of analysts, Dell 's CFO, Tom Sweet, said that if shareholders were rejecting it, the company' s chief executive officer, Tom Sweet, said that if shareholders rejected DVMT's offer, the company "would go back to the status quo".
The deal on the table, which would help simplify Dell's complicated ownership structure, was announced this summer. This was the culmination of a strategic review that the company had been conducting for months, and which also included a regular IPO and a combination with VMware itself.
The tracking stock was created to help finance Dell's purchase of the EMC storage pioneer in 2016. Dell, which was previously public, completed a debt buyback of nearly $ 25 billion in 2013 by its founder , Michael Dell, and the investment company Silver Lake.
Formerly the largest manufacturer of personal computers, Dell is now known for its enterprise products such as storage, servers and security software. It is also joining the crowded world of companies investing a lot of money in the so-called Internet of Things, as the IT giant looks for new opportunities for growth in a context of corporate expense shifting to the cloud.
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